There is no gain saying that the Nigerian Diaspora community has become an integral stakeholder in the country’s economic development and growth. Our Correspondent, GIFT HABIB, in this write up, looks at the windfall from the 3rd Diaspora investment summit viz-a-viz government efforts to remove every barrier to ease making business in the country and thereby creating an enabling environment for diasporan direct participation in the economy.
There is no doubt, the Diasporans have become the newest and latest source of funding for most developing countries and Nigeria is not an exemption.
Nigeria is said to have one of the highest diasporan remittance in recent time. In 2019 alone, about $26 billion was said to have been remitted to the country by Nigerians in Diaspora.
In 2018, migrant remittances to Nigeria equaled US$25 billion, representing 6.1% of GDP. This also represents 14% year-on-year growth from the $22 billion receipt in 2017. The 2018 figure translates to 83% of the Federal Government budget in 2018 and 11 times.
This amount does not include the undocumented remittances. It is a well known fact that Diasporans in recent time have been contributing directly to the development and growth of the country through direct investment in some key sectors of the economy.
Besides, with government funding drying up, especially with the Covid-19 pandemic, it has become imparative to leverage on Diaspora investment.
In this direction, lots of Nigerians have returned home to set up one business or the other, though not without its attending hiccups that seems to be peculiar to Nigeria.
Speaking at recent Nigerian Diaspora Investment Summit, Abike Dabiri-Erewa, Chairman/CEO of Nigerians in Diaspora Commission (NiDCOM) said Diaspora investment is being encouraged with the aim of actualizing the Federal Government Economic Recovery growth plan in encouraging multichannel investment options.
The summit with the theme “Post Covid 19 Resurgence: Targeting Diaspora Investment” seems to be apt, especially at this era when the Corona Virus Pandemic has affected both the human and material resources of all Nations.
She said, “We need our Diaspora Community more than ever before because they possess the pertinent resources and are at the cutting edge of technology and development. There is no doubt therefore that our Nigerian Diaspora are an asset to their host countries and Nigeria in terms of their resources, skills and talents. The engagement of Nigerians in Diaspora in resurging the economy is more pertinent now as the post COVID-19 economy recovery plan requires global best practices for which the Diaspora are best suited.”
In addition to being recognized as the source of significant resource flows to countries of origin or heritage through remittances, the Nigeria Diaspora need to be seen and should also be encouraged to see themselves as significant social investors in the development of the country. This in turn creates potential opportunities for governments, financial institutions, and the private sector to harness and scale up these investments for economic growth.
The Summit Coordinator Dr Badewa Adejugbe-Williams in her remark had reasoned why Diaspirans must be given the needed support, said, “the theme “Post Covid 19 Resurgence: Targeting Diaspora Investment” is apt, especially at this era when the Corona Virus Pandemic has affected both the human and material resources of all Nations. We need our Diaspora Community more than ever before because they possess the pertinent resources and are at the cutting edge of technology and development.
“With the covid-19 pandemic, there is no doubt therefore that our Nigeria Diasporans are an asset to their host countries and Nigeria in terms of their resources, skills and talents. The engagement of Nigerians in Diaspora in resurging the economy is more pertinent now as the post COVID-19 economy recovery plan requires global best practices for which the Diaspora are best suited.
“In addition to being recognized as the source of significant resource flows to countries of origin or heritage through remittances, the Nigeria Diaspora need to be seen and should also be encouraged to see themselves as significant social investors in the development of the country. This in turn creates potential opportunities for governments, financial institutions, and the private sector to harness and scale up these investments for economic growth.”
The 2-day Virtual Summit was therefore aimed at creating an avenue for prospective, meaningful and sustainable Diaspora Investment to be relied upon to boost economic growth in Nigeria and also about ensuring that the Nigerians at home and the Nigerians in the Diaspora works together closely to develop a great country.
Though business environment has always been unfair and unstable, which has in most cases led to discouragement. The major challenge before any prospective investor has always been the issue of multiple taxation, this is apart of other environmental challenges hampering the ease of doing business in Nigeria.
Acknowledging the importance and the contribution of the Diasporans in the country, the Vice President, Prof. Yemi Osinbajo said, “our diaspora is one of our most vital resources, a literarily endless reservoir for talent, trade, investment, tourism, education, culture and sport opportunities.
“But perhaps more important is the sheer range of well trained, honed and experienced talents that our diaspora represents. It is that potential not remittances that make our diaspora network an endless source of economic hope and social aspiration,” Prof. Osinbajo added.
Hence, this point to the recognition of the Diasporans as being one of the best groups to connect with when designing strategies for attracting Foreign Direct Investment (FDI).
This fact, however has not been lose on the government who had not only rose to address the situation, but has gone ahead to put in place incentives and other measures to clear whatever impediments to diaspora investment.
On what the government is doing to encourage more foreign direct investment, especially from Nigerians in diaspora, Osinbajo said the government through the 2020 Finance Bill will be slashing taxes so as to make Nigeria’s business environment attractive to investors, especially Nigerians in Diaspora.
Osinbajo who disclosed this latest incentive at the recent concluded 3rd edition of the Nigeria Diaspora Investment Summit (NDIS) which was held virtually, with the theme “ Post-Covid Economic Resurgence: ROLE OF DIASPORA INVESTMENT” said the 2020 Finance Bill just like the previous one aimed at attracting more incentives and make doing business in Nigeria more competitive.
Speaking specifically about how the Federal Government has been able to use the 2019 Finance Act to improve the business environment in the country, Prof. Osinbajo said “what we have done in furthering our own economic policy is to attempt to make the fiscal environment as attractive as possible. What we have done is to use the instrumentality of the Finance Acts to make or propose significant reforms.”
Prof. Osinbajo also emphasized that “the Finance Bill looks at several fiscal issues that we want to legislate on or amendments we want to make in the law, which would make it easier for us to implement the budget and also to ease the fiscal environment or make the fiscal environment friendlier. So, we started passing the Finance Act from last year and now we are proposing a second Finance Act this year.
“Last year, we passed a legislation giving small companies with a turnover of less than 25 million a year, tax exemption from the Companies Income Tax, while medium-sized companies with their turnover of between N25 million to a N100 million now pays Companies Income Tax at the lower rate of 20%. And then, services provided by Micro Finance Banks are completely exempted from VAT. So, no microfinance bank pays VAT now for its services. Withholding tax rates, also on roads, on bridges, on buildings, power plant construction contracts have been reduced from 5% to 2.5%.”
Explaining further, Prof. Osinbajo said “those who are doing construction contracts and proposing for construction contracts, pay a reduced rate, they no longer pay 5% they now pay 2.5%.
“Now in the proposed 2020 finance bill, we have gone a bit further, we are reducing by 50%, the minimum tax rate. So the minimum tax rate used to be 0.5%, now is reduced to 0.25% for gross turnover for the financial years ending between January 1st, 2020 and December 31st, 2021. So we have reduced the minimum tax rate by 50%, by half.”
On exemptions from education tax, the Vice President said, “we have exemption of small companies, with less than 25 million turnover from payment of the 2% educational tax under the tertiary Education Trust Fund. What we are saying now is that for companies that have a turnover off less than N25 million, they are no longer required to pay that 2% tax for the education tax fund so their tax burden is reduced.”
Speaking on efforts of the government in the area of software, he said “when companies acquire software for their company operations, in the past, that was treated as an overhead. Now we are going to treat it as a qualifying expenditure for tax deduction to improve the ease of doing business.”
He also explained government efforts towards job creation, saying “in response, we designed an ambitious N2.3 trillion Economic Sustainability Plan and the focus of that plan is on creating jobs, first by the Mass Agriculture programme where already we have enumerated 5 million farmers and geo-tagged them to their farm lands.
“Also, a Mass Housing programme where we are building 300,000 homes in all States of the Federation using local materials and using small to medium-sized construction companies and using direct labour.
“All of these locally produced. The whole idea is to generate jobs, generate opportunities and income in every locality that we are functioning in.”
In addition, the Vice President noted that “we also have a solar programme to make 5 million connections across the country. In other words, we are going to be putting 5 million Solar Home Systems across Nigeria that will service in all, about 25 million individuals.”
